David's gasoline station offers 4 cents off per litre if the customer pays in cash and does not use a credit card. Past evidence indicates that 40% of all customers pay in cash. During a one-hour period twenty-five customers buy gasoline at this station. What is the probability that no more than twenty pay in cash?
A) 0.0
B) 0.1
C) 0.9
D) 1.0

Question

Quizplus · Accepted Answer

This is a binomial probability problem where n = 25 (number of trials), p = 0.4 (probability of success, i.e., paying in cash), and we are looking for the probability of x ≤ 20 successes. The cumulative probability of getting 20 or fewer successes in a binomial distribution with these parameters is very high, essentially 1, because the probability of more than 20 customers paying in cash is extremely low.

David's Gasoline Station Offers 4 Cents Off Per Litre If